The global Software as a Service (SaaS) market is projected to experience 21.6% year-over-year growth in 2021, per research from Future Market Insights. The research firm also predicts that the global cloud services market is expected to rise steadily at a CAGR of 20.4% during the forecast period of 2020 to 2030. Analysts point out that one of the drivers of this growth is small and medium-sized business (SMB) adoption of SaaS solutions.
SaaS offerings can be desirable options for any size business, but here are three reasons SaaS is so appealing to SMBs:
1Low Upfront Cost
With software delivered via the SaaS model, users don’t have to pay up front for licensing like they do with traditional, on-premises software installations. Instead, they pay a monthly fee — or sometimes a quarterly or annual fee — to use cloud software that they access through the internet. For an SMB, that can mean the difference between coming up with thousands of dollars for an on-premises system license versus, in some cases, paying less than $200 per month.
Not only is the SaaS model more budget-friendly, but it also gives your clients the opportunity to afford software with more features than they probably could if they bought a license up front. In addition, browser-based systems can be used on a wide range of hardware, which also helps to keep costs low.
Technology disruption is happening at a faster and faster pace. VARs and ISVs are seeing fewer of their SMB customers have any comfort at the thought of making a large capital investment in software that could be outdated before they have a chance to see any ROI.
Software sold and delivered on a SaaS basis eliminates much of the risk a merchant would take by investing in an on-premises software license. Leading SaaS vendors continue to add features and integrations to their software, addressing new challenges that SMBs face. Because subscribers to the SaaS system always have the most recent version of the software, they can take advantage of new features as they’re introduced without having to purchase a new version.
Additionally, if the merchant’s business grows, SaaS is more easily scalable than on-premises systems.
3Low Demand for In-House Resources
SMBs may not have resources in-house capable of managing IT. SaaS vendors do the heavy lifting when it comes to software updates and security patches, so fewer in-house resources are required. SaaS systems are also easy to install, deploy, and configure. When the merchant works with a technology solution provider (TSP) who provides a full slate of value-added services and payments integration in addition to SaaS, the SMB’s entire IT environment is covered.
There are also benefits for TSPs who sell SaaS systems — there is less labor required to support them while you build a recurring revenue stream.
Do Your Customers Know What They’re Missing?
If your prospects have only used legacy software systems — or maybe barebones apps to save money — they may not be aware of the benefits SaaS can offer their businesses. It’s a way for SMBs to have a full-featured solution that boosts efficiency, productivity, and the quality of customer experiences without the high upfront cost and risk of a legacy system. Talk to SMBs in your market about the SaaS solutions in your portfolio.